German economic research institutes are expected to lower their growth forecasts due to the Iran war, economists from the Ifo Institute, the IMK (Institute for Macro Studies), the RWI, and IW Cologne told the “Industrie und Handel” newsletter of Politico on Tuesday. They anticipate the conflict to reduce Germany’s GDP by between 0.2 % and 1.0 %, depending on how long the war lasts.
Ifo’s chief economist Timo Wollmershäuser said that a rise in inflation to just under 2.5 % is likely if oil and gas prices fall again within the coming weeks. This would slow growth by about 0.2 percentage points, bringing the 2024 forecast to 0.8 % and the 2025 forecast to 1.2 %. If fossil‑fuel prices remain high for an extended period, the Ifo sees inflation reaching 3 % and growth falling another 0.2 percentage points, to 0.6 % in 2024 and 0.8 % in 2025.
Sebastian Dullien, scientific director of the Hans‑Böckler‑Stiftung’s IMK, echoed this view. Until the war broke out, the trend was toward raising the 1.2 % growth expectation for 2026. “That has now certainly been undone” he noted. He added that if oil prices quickly return below $100 per barrel, growth losses would likely be limited to a few tenths of a percentage point. Prolonged disruption of oil and LNG supplies, however, could deliver a shock large enough to halt Germany’s recovery.
Samina Sultan of IW Cologne expanded on the long‑term implications. “If oil prices stay at $100 or even $150 per barrel for two years, 2027 GDP would be 0.6 %-1.0 % lower than it would be without the price increase” she explained.
RWI expert Torsten Schmid was somewhat more optimistic. “If oil and gas prices stay at their current level until the end of March and then slowly fall, we estimate the negative impact on GDP in 2026 to be about 0.2 percentage points” he said.
